World’s Biggest Coal Consumer Doubles Down on the Fuel

China is the world’s largest consumer of coal. In recent years, China has relied on coal to generate about two-thirds of its electricity. China has been signaling that it would like to reduce coal consumption to meet the promise it made to the United Nations to reduce carbon emissions.

China’s government said it would raise coal power capacity by as much as 20% by 2020, ensuring a continuing strong role for the commodity in the country’s energy sector despite a pledge to bring down pollution levels.

In a new five-year plan for electricity released Monday, the National Energy Administration said it would raise coal-fired power capacity from around 900 gigawatts last year to as high as 1,100 gigawatts by 2020. The roughly 200-gigawatt increase alone is more than the total power capacity of Canada.

By comparison, the agency said it would increase non-fossil fuel sources from about 12% to 15% of the country’s energy mix over the same period. Coal would still make up about 55% of the electricity mix by 2020, down from around two-thirds in recent years.

Despite the better efforts of the federal government to make one of the United States largest natural resources a stranded asset (worthless), it doesn’t sound like coal is going away anytime soon.

Q&A on China’s coal industry

Jeremy Jones, CFA

Jeremy Jones, CFA is the Director of Research at Young Research & Publishing Inc., and the Chief Investment Officer at Richard C. Young & Co., Ltd. Jeremy is a contributing editor of youngresearch.com.